After inventing a safer, more user friendly and superior quality household device a firm will be formed to manufacture and distribute my invention. Consideration will be given to the main three legal forms of business in order to make a management decision on which would best suit the needs and limitations of the product and inventor. Limited funds and knowhow are just a sample of the challenges facing the new firm. After comparing the forms of business and all the negative and positive components and the management decision is made, a business plan will start to be developed. It is the belief that not only will the invention hold its own in an already saturated market, but also with the proper business plan, it can be used in conjunction with a wide variety of already existing products.
Management Decision Regarding the Legal Form of Business
There are several issues involved in the choice of an appropriate legal form of business. There are many factors that will need to be considered when deciding which form of business will allow the best opportunity for the firm’s success. The following will touch on some of the key issues facing the new firm as well as what types of legal business forms are recognized and how they apply to the new firm.
The first issue facing the new firm is the limited availability of startup funds. The second is that the inventor of the product has very little financial skills and absolutely no management skills. There is also a fundamental lack of manufacturing know how. The market is saturated with products that perform the same function although they are all inherently dangerous to operate and ours is superior in quality, functionality, and safety. Do to the market and limited initial production, expected annual growth is only 2%.
The first legal form of business is a sole proprietorship. This form of business will allow the owner total control and is the easiest to set up with low operating cost. On the down side, this form of business relies on the knowhow of the owner to run the business and he is totally legally liable for all debt. This could be a problem considering the inventors limited skill set, but could be beneficial considering the low startup cost. This form of business also relies on the owner for the financial resources to expand, and...